A New LC 4658 Question: Does 15% Increase/Decrease Apply?

Saturday, September 9, 2006 | 0

A thread on the WorkCompCentral Forums (www.workcompforums.com) addressed an issue that the editors felt was of importance to the workers' compensation community. It is republished here, edited for grammar, spelling, with identities redacted.

The administrative director of California Division of Workers' Compensation evidently adopted the interpretation that neither Labor Code 4658(d)(2) nor 4658(d)(3) are applicable to employers of fewer than 50 employees. This is a reversal of an early interpretation by the director. This current interpretation has been reflected in proposed Rule 10002 since the proposed regulation was originally published on or about Oct. 30, 2005.

The proposed regulation was first published for a 45-day comment period ending Dec. 15, 2005. It subsequently went through four amendments, each with a 15-day comment period. The latest comment period closed on Aug. 9, 2006. The pertinent language is subdivision (a) of Rule 10002, which remains intact from the earliest to the latest draft:

(a) This section shall apply to all injuries occurring on or after Jan. 1, 2005, and to the following employers:

(1) Insured employers who employed 50 or more employees at the time of the most ... recent policy inception or renewal date for the insurance policy that was in effect ... at the time of the employee's injury;

(2) Self-insured employers who employed 50 or more employees at the time of the ... most recent filing by the employer of the Self-Insurer's Annual Report that was ... in effect at the time of the employee's injury; and

(3) Legally uninsured employers who employed 50 or more employees at the time of injury.

One could agree with the interpretation reflected in the proposed regulation. The 15% decrease under 4658(d)(3)(A) does not apply to employers of fewer than 50 employees. A contrary interpretation has been asserted based on the fact smaller employers are not exempted by the language of (d)(3)(A).

Smaller employers are exempted from (d)(3)(A) by the last sentence of (d)(3)(B). That sentence reads, "This paragraph shall not apply to an employer that employs fewer than 50 employees."

The word "paragraph" is a term of art in statutory construction. It means the outline level identified by Section 4600, subdivision (d), paragraph (3). It is different from the term of art, "subparagraph," which would be the outline level identified by Section 4600, subdivision (d), paragraph (3), subparagraph (A).

The debate should be laid to rest when the director's rule becomes final. One could predict the rule will become final soon, although the only knowledge of the status is what can be seen at www.dir.ca.gov/dwc/DWCPropRegs/ReturnToWork_regulations/ReturnToWork_regulations.htm.

Despite what one believes to be a compelling argument and despite the director's concurrence, you may wish to include a warning that there are some advocates who still assert that small employers get the 15% reduction, and the issue has not been resolved by the courts.

There is a plan at present to add just such a caveat to Table 8, assuming Rule 10002 does not become final between now and mid-October or so. If it does become final, Table 8 will reflect whatever it has to say on the subject.

To go to this message directly click on this link: www.workcompforums.com/ca/pro//messageview.cfm?catid=5&threadid=1411

This column was adapted from a post in the California Professional WorkCompForums.

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